Golden years grow dimmer as workers labor longer

-Madie Green is a self-employed family child care provider who has no set retirement plan. She also is raising her two grandchildren and is worried about her ability to eventually retire.

-Madie Green is a self-employed family child care provider who has no set retirement plan. She also is raising her two grandchildren and is worried about her ability to eventually retire. (Erin Kirkland, Baltimore Sun)

Before the recession, Madie Green's home daycare was normally full. As parents lost their jobs and pulled kids out, the 55-year-old District Heights woman spent through her savings to keep up on her mortgage and auto payments.

Her business still hasn't recovered to what it once was, and now she's so worried about whether she'll be able to retire that she is expanding into an after-school program for elementary and middle school students.

Though stock prices are rising, unemployment is falling and the economy is growing, more workers are choosing to stay in the labor force longer. The trend reverses decades of steadily falling retirement ages. During the recession, delaying retirement was spurred by job losses, salary reductions, depressed home prices and depleted savings. Now, workers anticipate smaller returns on their investments. Health benefits for retirees also are eroding even as costs are rising. Meanwhile, people are living longer, healthier lives — all of which adds to a need to work and save longer.

The share of workers nationwide aged 45 to 60 who planned to delay retirement soared to 62 percent last year, the Conference Board reported, up from 42 percent in 2010. Even in states such as Maryland that were not among the hardest hit economically, the share of workers planning to delay retirement jumped to 61 percent in 2012 from 40 percent in 2010.

Separately, analysts at the University of Michigan's Institute for Social Research found that about 40 percent of older Americans have delayed their planned retirement since the end of the recession.

Since the recession ended, "a lot of people spent more than they earned and had to continue to deplete their savings, and that makes them less prepared for retirement," said Gad Levanon, director of macroeconomic research for the Conference Board. "People were unemployed for a while, or worked part-time or got significant pay cuts and were unable to cover their expenses. Savings shrunk and made them more willing to delay retirement."

The Conference Board found that workers 45 to 60 who've lost a job, had a salary cut or saw their home decline in value are more likely than others to plan to delay retirement. But even workers who were not significantly hurt by the recession are more likely than before to plan to work longer. That trend held true across all ethnic, gender and income lines.

CareerBuilder found 60 percent of workers aged 60 or older planned to look for another job after retiring from their current company — up from 57 percent last year. About three quarters of respondents planned to work another one to six years, and more than one in 10 of 680 workers surveyed said they probably never would be able to retire.

On average, those who delayed retirement are waiting about one and a half years longer than they originally planned to leave their jobs, said Brooke Helppie McFall, an economist with Michigan's Institute for Social Research.

Many workers have lost too much value in savings and other assets or were forced to draw down on those assets, McFall said. A typical household lost about 5 percent of its total wealth between the summers of 2008 and 2009. The biggest asset for most people is their home, and housing prices still have not recovered pre-recession levels.

The recession exerted particular influence on the retirement plans of men 55 to 64, U.S. Labor Department statistics show.

"Their retirement is less secure than they had thought," said labor economist Heidi Shierholz, either because of a decrease in assets or a loss of a job that left a long-term income gap.

"More of them are in the labor force than there would be if the Great Recession hadn't happened," said Shierholz, with the Washington-based Economic Policy Institute, who compared Bureau of Labor Statistics pre-recession projections to actual employment figures.

Jeff Miller realized two years ago he would not meet his goal of retiring at 62.

A computer server engineer at a Frederick data center for Marriott International, Miller suffered losses in the value of his 401(k) and his home. Plus, he has seven more years to pay off a student loan for his son.

At 61, he expects to work at least six more years.

"I was hoping for 62, but that went out the window when the economy went south," Miller said. "And I couldn't have sold my house four years ago."

He and his wife, a real estate agent who's not ready to stop working, have put off plans to sell their home in Frederick County's Monrovia and retire out of state where they hope to pay lower taxes on a comparable home.

Staying at work longer might be the financially savvy way to go anyway, financial planners say.

"Sometimes it's OK for those who are happy in their jobs," said Christopher Brown, president of Ivy League Financial Advisors in Rockville. "Sometimes it's painful."

"The big question that each client asks as they prepare for retirement is, 'Can I live the lifestyle I want to live without running out of money?'" Brown said. "When the market hit the skids in 2008, a lot of people's retirement portfolios were really hurt. They want to build some cushion into their retirement if it happens again."

One of his clients stands to get half her husband's pension but not until he retires, so she's postponed her own retirement. Other clients who had been out of work for a few years couldn't add to retirement savings during that period.

But clients who continued investing in the markets have seen their portfolios bounce back to pre-recession levels, he said.

Stuart Ritter, a financial planner with T. Rowe Price, said the financial crisis caused more people to focus on retirement readiness.

"They are recognizing that when you're getting closer to retirement, one of the most powerful things you can do to improve your lifestyle in retirement is to delay it," he said. "When you work for a few more years, you have a few more years of contributions, a few more years of potential growth and fewer years that your money needs to support you."

Brown said he tries to steer his clients to act long before they reach retirement age.

"After they made the decision to retire, it's much tougher to go back into the workforce," Brown said.

Paulette Miller, no relation to Jeff Miller, learned that from her experience.

Miller, 68, retired six years ago from running a catering business in Virginia. Financial and family troubles, however, have pushed her back into the job market. The resident of Nottingham in Baltimore County has owned a business, managed a resort and taught adult literacy and marketing, but has been unable to find a full-time job.

She supplements her Social Security income by running 10-day sales events at Costco, where she sells clothing, shoes and bedding for marketing companies, and by acting as an extra in Baltimore-filmed television shows and movies.

"When I retired, I didn't plan on going back to work," Miller said. "Unfortunately, that has happened. I have to work when I can."

Otherwise, she said, she wouldn't be able to afford her health insurance — and that's getting even tougher to cover. Her costs for Medicare, supplemental insurance and dental insurance rose this year, but "my Social Security did not go up, so I am further in the hole," she said. "I'm making less than I was making three years ago."

Betty Schueler always expected four decades of steady work in the same job would guarantee a comfortable retirement. That was before the 58-year-old bartender and restaurant server lost her job last year after a management change in food services at Baltimore-Washington International Thurgood Marshall Airport. She'd worked at the airport 40 years, outlasting several food services operators.

With unemployment benefits ended and her savings dwindling, the Severn woman hopes to land something soon — maybe at a casino, hotel or restaurant. But wherever she ends up, she sees years of work in her future.

"Retirement is a word that's no longer in our vocabulary," Schueler said. "I will never see that in my lifetime."

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